Regional Variation in Business-Government Relations in Russia and China



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Figure 1: Trends in Fiscal Centralization, Russia and China

Table 1: "Can you tell me which of the elements of the business environment included in the list, if any, currently represents the biggest obstacle faced by this establishment?"




% of firms citing given problem as greatest obstacle

Problem

Russia

China

Access to finance

13.13

21.98

Access to land

3.93

4.61

Business licensing and permits

3.74

0.67

Corruption

7.58

1.01

Courts

0.77

0.1

Crime, theft and disorder

0.93

0.58

Customs and trade regulations

2.53

1.68

Electricity

1.95

5.42

Inadequately educated workforce

7

16.89

Labor regulations

0.58

1.73

Political instability

5.9

0.67

Practices of competitors in the informal sector

7.09

16.22

Tax administration

1.9

4.27

Tax rates

38.56

16.27

Transport

4.42

7.92

Total

100

100

Table 2: "In a typical week over the last year, what percentage of total senior management's time was spent on dealing with requirements imposed by government regulations?"







Percentage of firms citing given percentage of time

Percentage of time in average week

Russia

China

0

16.13

54.75

1

3.68

22.46

2

2.36

11.42

3

1.66

3.55

4

0.41

1.63

5

10.53

2.98

6

0.29

0.1

7

0.33

0.05

8

0.44

0.14

9

0.04

0

10

19.26

1.2

> 10%

44.87

1.74

Total

100

100

Table 3: "The court system is fair, impartial, and uncorrupted."




Percentage of firms choosing response (don't know and non-responses excluded)




Russia

China

Strongly disagree

26.91

3.81

Tend to disagree

39.51

35.65

Tend to agree

27.39

53.18

Strongly agree

6.19

7.37

Total

100

100

Table 4. "To what degree are the practices of competitors in the informal sector an obstacle to the current operations of this establishment?"




Percent of firms choosing response (don't know and non-responses excluded)




Russia

China

Does not apply

7.28

0.1

No obstacle

51.78

39.35

Minor obstacle

11.92

38.77

Moderate obstacle

14.83

17.85

Major obstacle

9.54

3.41

Very severe obstacle

4.64

0.53

Total

100

100

Table 5: Competitive orientation of firms, Russia and China







Traininga

ISOb

New management practicec

R & Dd

New producte




Russia

China

Russia

China

Russia

China

Russia

China

Russia

China

Yes

45.1

85.3

10.8

60.3

26.1

45.1

13.3

39.8

26.7

51.8

No

54.9

14.7

89.2

39.7

73.9

54.9

86.7

60.2

73.3

48.1

Total

100

100

100

100

100

100

100

100

100

100

Percentages are calculated after excluding non-responses, "don't know" and "doesn't apply" responses from totals.


a. "Over fiscal year 2011, did this establishment have formal training programs for its permanent, full-time employees?"

b. "Does this establishment have an internationally-recognized quality certification, such as ISO 9000, 9002, 14000, or HACP?"

c. "Over the last 3 years, has this establishment introduced new managerial/ administrative processes?"

d. "In the last 3 years, did this establishment spend on research and development activities performed within the establishment?"



e. "Over the last 3 years, has this establishment introduced a new product or service?" (NB: Wording of question in Russia was slightly less restrictive: "In the last 3 years, has this establishment introduced new or significantly improved products or services?")
Table 6: Measures of cross-regional variation in regional/ local mean values:





Russia

China

Mean predicted likelihood:

rho

cv

rho

cv

Spent on R & D in last 3 years

0.047

-0.135

0.207

-0.440

Introduced new management practices in last 3 years

0.047

-0.167

0.178

-0.775

Cited access to finance as greatest obstacle

0.029

-0.012

0.253

-0.131

Cited tax rates as greatest obstacle

0.045

-0.101

0.371

-0.032

Informal sector competition more than minor obstacle

0.080

-0.039

0.242

-0.142

Offer training programs

0.061

-0.856

0.240

0.086

Hold international quality certification

0.032

-0.120

0.188

0.549

Introduced new product in last 3 years

0.057

-0.135

0.224

1.237

Agree: courts fair

0.085

-0.087

0.192

0.314

Management spends > 5% time dealing with government regulations

0.117

0.134

0.500

-0.102

Inadequately educated workforce as more than minor problem

0.116

-0.483

0.192

-0.047



1 (Acknowledgements) .

2 Calculated from WDI data at .

3 Note that the geographic sampling units in Russia were regions, ie first-order administrative-territorial units, whereas the sampling units in China were cities. It is possible that this difference affects the results. Below I discuss this point further.

4 In the case of Russia, the coefficient of variation for mean size of firm was only .04 across the regions sampled; the cv for the proportion of firms that were in the service sector was .126 and that for the proportion of firms in manufacturing was .24. For China, the cv's were similar for individual sector shares. Here even more fine-grained sectoral categories are available. The cv for the average share of food and related industries was .3; for chemical industries it was .23; for machine-building .34; for retail and wholesale trade it was .69. The city samples are closely matched with respect to (logged) firm size as well. The coefficient of variation for firm size was .07.



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